Tuesday, 11 February 2014

Submissions - The Australian Risk Policy Institute (ARPI)

Inquiry into Aspects of the Wrongs Act 1958


BACKGROUND
The Victorian Competition & Efficiency Commission has called for submission on an Inquiry into Aspects of the Wrongs Act 1958.
Due: 17 January 2014
ARPI Web Publication: after 17 January 2014

SUMMARY OF ARPI SUBMISSION
ARPI notes the narrow terms of reference, and the limited ability of the Victorian Competition & Efficiency Commission to properly expressly consider risk policy in relation to tortious damage.
ARPI considers that, before changes to the Victorian scheme can be made with any confidence, the basic lack of information about the Victorian market must be remedied.  In this respect the Commission should consider recommending the enactment of legislation similar to Part 15.2 of the ACT Civil Law (Wrongs) Act 2002.

SUBMISSION

In common law jurisdictions, wrongs acts act in concert with the common law to deal with civil claims for damages arising from deliberate or negligent acts.  In some places, including Victoria and New South Wales, local wrongs acts are supplemented by statutory schemes dealing with particular types of damage (dust diseases, traffic accidents).  The Victorian legislation, like NSW and many overseas jurisdictions, place significant limits on civil damages which could be obtained as a result of a negligent or deliberate act – this is not necessarily the position in other common law jurisdictions (including the Australian Capital Territory).

ARPI notes that the present review is a very narrowly cast. Given the narrow focus of this review, little opportunity is available to reassess the overall effectiveness of the Victorian Government’s legislative response to the 2002 Final Report of the Review of the Law of Negligence.  In particular, the terms of reference do not enable the Commission to reconsider the approach urged by the respected Victorian jurist, Justice Marcia Neave AO, in a detailed 2002 report prepared at the request of Australian Health Ministers and Attorneys-General.

ARPI takes as its starting point that vulnerability defines the level of risk.  Accordingly, in considering the broader issue in a range of other circumstances, ARPI seeks to understand the real risks and real consequences of tortious acts, in the first instance at the level of the injured party but equally looking at the upstream, downstream and knock-on effects of a failure to protect the vulnerabilities of all stakeholders (including an insurer and the state) in the dealing with compensation. 


Lack of information on which to base reform proposals

ARPI notes that, while the Commission had access to some information about insurance claims (including APRA insurance data), a basic lack of data about market behaviour confounds detailed examination of the market.  At p46 the Commission reported:
“That said, the Commission was limited in its capacity to analyse the impacts of options
on the price and/or availability of public liability and professional indemnity insurance
by the lack of data on the impairment assessment of injuries relating to Wrongs Act
claims.”

And at p50:
“While the Commission attempted to measure the potential impact on the price of insurance, the
uncertainties around such estimates tends to suggest a cautious approach to
addressing the identified inconsistencies or anomalies is warranted.”

While identifying the lack of transparency as a key issue, the Commission makes no recommendation to remedy the situation. 

The Victorian legislative scheme might be contrasted with the equivalent ACT law (the Civil Law (Wrongs) Act 2002 Part 15.2) where that jurisdiction, early identifying the lack of data as a serious systemic weakness, imposed detailed requirements for insurers to provide annual reports about the insurance market.  

These are published annually and are the subject of considerable media attention – particularly when there is any suggestion that premium prices are excessive.

Government intervention in the Victorian market has removed the old simple relationship between loss and damages.  Instead, insurers now have recourse to a series of statutory devices to reduce the amount of the claim to be paid.  In Victoria, insurers have not been held to account for these concessions.

The risk here is now not that the injured will receive full and adequate compensation – that is denied by the legislative scheme and is not open for comment in this review.  The risk is that, in the artificial environment designed to minimise insurer costs, insurers may levy premiums with no commensurate relationship to possible loss.  Because insurers do not provide the Victorian Government with detailed data about premiums, claims and claim costs, Government is not in a position to make considered calls about further adjustments to the scheme. 

Before changes to the scheme can be made with any confidence, the basic lack of information about the Victorian market must be remedied. 





Peter
Palerang
January 2014

Note that this submission reflects input from other ARPI members.



Post a Comment